Italcementi cautious on Ciments Francais merger talks

Italian cement maker Italcementi cooled market talk it could buy out its French unit Ciments Francais, which was fuelled last week by moves to streamline its funding operations.

On Friday, the world’s fifth biggest cement maker approved a EUR2bn bond programme and launched an offer to buy out US noteholders who blocked its 2009 takeover of Ciments Francais.

Italcementi said that, going forward, it would oversee all of the group’s funding activities, which to date have been handled by Ciments Francais.

"The obstacles for a merger are still there. We didn’t agree anything with the noteholders about the merger. So the merger is still not possible according to the contract clauses," said Carlo Pesenti, chief executive and a member of the group’s controlling family.

Analysts said a merger with Ciments Francais would generate synergies and boost Italcementi’s earnings.

Last June, Italcementi abandoned plans to merge with Ciments Francais, blaming requests made by US noteholders who, under the bond contract, have a say in group deals.

During Monday’s conference call, Pesenti said he had "no idea" how many noteholders would accept Italcementi’s offer of US$1,065 for each note worth a nominal US$1,000. "Fifty per cent... probably not 100 per cent."

The offer ends on March 24 and can be extended. The notes were placed between 2002 and 2006 for a nominal US$500m.